This document outlines flexible spending accounts (FSAs) including program costs, requirements, enrollment instructions, program administration and where to find more information.
When an employee participates in an FSA, he or she contributes a specific amount from their paycheck into an account to pay for out-of-pocket expenses such as medical or dependent care costs. FSAs help reduce an employee's taxes while an employee saves for health care or dependent care expenses. Employees who pay for dependent care costs in order to work or who have medical costs that are not reimbursable under their health insurance may pay for these expenses with pretax dollars. Money contributed to an FSA is not subject to federal, state and Social Security taxes.
Eligible Research Foundation (RF) employees may contribute to two types of FSAs: health care spending account (HCSA) and dependent care spending account (DCSA). When eligible medical or dependent care expenses are incurred, the employee is reimbursed by requesting tax-free withdrawals from that account.
This program is made possible under Section 125 of the Internal Revenue Code (IRC).
Eligible employees pay the full cost of the program. Participation in this program will not affect the amount of basic retirement plan contributions, life insurance or disability insurance. A participant will have lower tax withholdings and higher take-home pay because taxable income is reduced. Since Social Security income credits are reduced by the amount of the FSA contribution, participation may reduce a person's future Social Security benefits.
The period of coverage for the FSA is the calendar year plus 2 1/2 months grace period.
The Internal Revenue Service (IRS) has strict guidelines for FSA use because of the tax advantages. It is important that employees plan carefully before deciding how much to contribute. If an employee contributes pretax dollars into an FSA and does not have enough eligible expenses during the plan year (plus the 2 1/2 month grace period) to equal the amount contributed, he or she will lose the balance remaining in the account when the plan year ends.
Contributions of up to $4,000 per calendar year may be made to a HCSA, and is used to reimburse eligible uninsured, out-of-pocket medical expenses. Eligible health care expenses include those that are not insured, copayments and deductibles, and expenses that exceed the limits of the employee's health insurance plan. Uninsured dental and vision care expenses can be reimbursed as well as medical and prescription drug expenses.
For purposes of federal income and Federal Insurance Contributions Act (FICA) tax, as well as NYS income tax, employee earnings are reduced by the amount of the contribution. The minimum contribution is $5 per pay period. Participation in this program will not affect the amount of basic retirement plan contributions, life insurance or disability insurance.
Contributions of up to $5,000 per calendar year, dependent on the employee's tax filing status, may be made to a DCSA, and is used to reimburse dependent care expenses that allow an employee and an employee's spouse to work. Expenses can be reimbursed for the care of children through age 12 who reside in the employee's household, as well as adults or older children who are mentally or physically unable to care for themselves and who spend at least eight hours a day in the employee's household.
For purposes of federal income and FICA tax, as well as NYS income tax, employee earnings are reduced by the amount of the contribution. The minimum contribution is $5 per pay period. Participation in this program will not affect the amount of basic retirement plan contributions, life insurance, or disability insurance.
Employees must meet the following criteria in order to participate in this program:
Employees who are paid on a regular, biweekly schedule may participate in this program. Hourly and student employees are not eligible. There is a waiting period of six months from date of hire or date of eligibility (if later).
Newly eligible employees must enroll within 60 days of the date they meet all eligibility requirements. Otherwise, they must wait until the next open enrollment period, unless there is a qualifying event as defined by the IRS. Enrollment during a subsequent open enrollment period may not take place unless all eligibility requirements are still being met at the time of enrollment.
The following table describes what operating locations should do if an employee terminates employment and is rehired during the same plan year:
If an employee is rehired... |
Then... |
Within 30 days or less of termination |
The employee will automatically be reinstated into the FSA annual election that was active prior to termination. In order for the employee to have access to the HCSA balance up to the full annual limit, missed deductions must be made up by entering the special nonrecurring element health care spending special inputs in the RF business applications. The HCSA balance will be reduced by the amount of approved reimbursements for eligible medical expenses for that calendar year. Missed deductions cannot be made to a DCSA. |
After 30 days or more from the date of termination |
The employee will automatically be reinstated into the FSA salary reduction levels active prior to termination. The annual benefit maximum will be prorated based on the remaining number of payroll periods in the year. Missed deductions will not be made up. |
Fringe Benefits Management Company (FBMC) is the FSA administrator for the plan year. FBMC reviews claims, writes checks, provides direct deposit of reimbursements, and offers customer service and accounting services. FSA participants should send all claims for reimbursement directly to FBMC.
Operating locations may order supplies by calling FBMC at 1-800-342-8017. Employees who have questions about flexible spending accounts should call FBMC Customer Service at 1-800-342-8017, Monday through Friday, 7 a.m. to 10 p.m. EST. Employees have 24-hour automated access to their benefits by calling FBMC at 1-800-865-FBMC.
As part of new employee orientation, operating locations should provide new hires with the Flexible Benefits Plan Reference Guide. Operating locations may order supplies by calling FBMC.
Upon request, operating locations should provide any of the following information to employees:
The following table describes the steps operating locations should take to open and maintain a flexible savings plan for an employee:
Step |
Action |
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1 |
Provide the employee with enrollment materials. Refer to the "What to Give Employees" section. |
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2 |
Receive and review the signed and dated Flexible Spending Account Enrollment Form from the employee, ensuring that all requested information was correctly completed. The employee retains a copy. If the employee is using direct deposit for reimbursement, the FBMC Direct Deposit Authorization Form may also be received from the employee. |
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3 |
Mail a copy or fax the completed Flexible Spending Account Enrollment Form to FBMC, Attn: Enrollment Processing, P.O. Box 1878, Tallahassee, Florida 32302-1878. Also mail or fax (850-425-6220) any completed FBMC Direct Deposit Authorization Form. |
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4 |
On the original copy, record the date the Flexible Spending Account Enrollment Form is mailed or faxed. Retain the original forms. |
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5 |
If the employee is... |
Perform system input |
|
Enrolling in a Health Care Spending Account |
Go to the Element Entries - xxxx window of the employee's record, and add the health care spending recurring element. Refer to the Process Help Recurring Element to Enroll a Regular Employee - Enter (Process Help) Note: Graduate student employees are not eligible to open this account. |
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If the employee is a new hire... |
If the employee is signing up during open enrollment... |
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The effective date should be the new employee's coverage date because this benefit has a waiting period of six months. To determine the employee's coverage date, use the Process Help Custom Eligibility Table - View (Process Help)." In that table, use the person's dental plan coverage date when entering the health care spending element. |
Use 01-JAN of the next calendar year as the effective date. Note: Also, ensure that the employee is eligible and completed the waiting period. Refer to the section "Eligibility and Waiting Period." |
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Enrolling in a Dependent Care Spending Account |
Go to the Element Entries - xxxx window of the employee's record, and add the dependent care spending recurring element. Refer to the Process Help "Recurring Element to Enroll a Regular Employee - Enter (Process Help) Note: 1). Deductions should not be taken on a retroactive basis. 2). Graduate student employees are not eligible to open this account. |
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If the employee is a new hire... |
If the employee is signing up during open enrollment... |
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The effective date should be the start date of the new employee. However, if a payroll period has passed, the effective date should be the first day of the payroll period following the employee's enrollment. |
The effective date should be 01-JAN of the next calendar year. |
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6 |
Operating locations direct all requests for reimbursements to FBMC. |
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Employees may change a spending account election or vary the salary reduction amount they have selected during the plan year, under limited circumstance, as provided by established IRS guidelines and the RF's health care and dependent care spending account plans. A partial list of permitted and not permitted events is listed in the Flexible Benefits Plan Reference Guide.
FBMC, in its sole discretion on a uniform and consistent basis, will review the facts and circumstances of each properly completed and timely submitted election change request.
Election changes must be consistent with the event. Within 60 days of the event, the employee must complete and timely submit to FBMC a Change In Status/Election form. The employee must contact FBMC to obtain this form. Documentation supporting the mid-plan year election change request is recommended and may be required. Upon the approval and completion of processing an election change request, an existing election will be stopped or modified as appropriate but no earlier than the first payroll after the approved election change request was received by FBMC. If the election change request is denied, the employee will have 60 days from the date of the denial to file an appeal with FBMC by following the procedures in the appeals process.
Permitted election changes during a plan year as well as the appeals process are described in the Flexible Benefits Plan Reference Guide.
The IRS requires an employee to continue participation throughout the calendar year for which he or she is enrolled because of the tax advantages of these programs. Employees may only cancel participation if there is a qualifying event, as defined by the IRS. Employees must carefully estimate expenses for the year because the money left in an account at the end of the year will be forfeited if not used.
Program information can be obtained from the Flexible Benefits Plan Reference Guide.
Account information, downloadable forms, and other information can be found at the Customer Service Center page of the FBMC Web site at https://www.fbmc-benefits.com/customer/.
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